Patane v Asteron Life Ltd
[2004] HCATrans 296
[2004] HCATrans 296
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Adelaide No A17 of 2004
B e t w e e n -
ANTONIO PATANE
Applicant
and
ASTERON LIFE LIMITED
Respondent
Application for special leave to appeal
McHUGH J
GUMMOW J
KIRBY J
TRANSCRIPT OF PROCEEDINGS
AT ADELAIDE ON WEDNESDAY, 11 AUGUST 2004, AT 3.33 PM
Copyright in the High Court of Australia
MR S.W. TILMOUTH, QC: If the Court pleases, I appear with my learned friend, MR S.D. OWER, for the applicant. (instructed by James Adam Richards)
MR M.J. O’DONNELL: If the Court pleases, I appear for the respondent. (instructed by Thompson Playford Lawyers)
McHUGH J: Yes, Mr Tilmouth.
MR TILMOUTH: If the Court pleases, the subject matter of the proceedings in the court below was section 40(1)(g) of the Bankruptcy Act. The issue was whether or not the applicant had a counterclaim, set‑off or cross‑demand equal to or exceeding the relevant judgment debt. If the Court pleases, however, what became ‑ ‑ ‑
GUMMOW J: Now, there was an application to set aside the bankruptcy notice.
MR TILMOUTH: That is right.
GUMMOW J: And that was heard in the Federal Magistrates Court?
MR TILMOUTH: It was.
GUMMOW J: And then there was an appeal to the Federal Court exercised by one judge.
MR TILMOUTH: Yes. Now, what happened, if the Court pleases, the application initially filed in the Magistrates Court was delegated to a registrar and the registrar initially heard it and then it came before the federal magistrate and then there was the appeal from the federal magistrate to the Federal Court. As a matter of practice, if the Court pleases, by the way, if the application had been brought originally in the Federal Court it would have been delegated to a registrar in any event. So in the end result not a lot turns on, in our submission, the actual court in which the matter first commenced. However, if the Court pleases, what became critical because the relevant counterclaim ‑ ‑ ‑
GUMMOW J: There was a shift in the facts. There was a shift in the state of account.
MR TILMOUTH: That is right, because the counterclaim was a monthly benefit under an insurance policy so it changed month by month. Now, if the Court pleases, the actual timing became critical because on the findings of Justice Lander, in our submission, although the registrar of the Magistrates Court was right at that time, at the time the matter was reheard as a hearing de novo before the federal magistrate, the position had changed and a fortiori, of course, it had changed yet again to benefit the applicant by the time it reached Justice Lander. Now, at page 44, your Honours ‑ ‑ ‑
GUMMOW J: At what stage do you say it is fixed? It cannot be fixed whenever there is an appeal.
MR TILMOUTH: No, the point we say it is fixed, if the Court pleases, is when the federal magistrate heard the matter as a rehearing de novo from the registrar of the Federal Magistrates Court.
GUMMOW J: Is that because the registrar could not exercise and would have been exercising judicial power?
MR TILMOUTH: In essence, that is our point, if the Court pleases, or put another way, because not only under the Federal Magistrates Court Act and not only because of constitutional reasons is that rehearing a full rehearing de novo it must mean that when the magistrate heard the matter that that became the relevant hearing for the purposes of section 40(1)(g) because it replaced totally what the registrar had done, that became the relevant hearing for, in effect, constitutional reasons.
GUMMOW J: What is the section in the Bankruptcy Act that gets this application to set aside the bankruptcy notice into the Federal Magistrates Court? It just talks about getting into the court, does it not?
MR TILMOUTH: That is right. It just says “the Court”. So it is silent. The section itself is silent and, of course, the cases that are relied upon by my learned friend are cases essentially coming from England where this constitutional hierarchy does not apply and has no application. Now, if the Court pleases, at page ‑ ‑ ‑
GUMMOW J: So it is a Harris v Caladine point?
MR TILMOUTH: Exactly, precisely and we argued this before his Honour. Now, if the Court pleases, at page 44 at line 25, his Honour recognised that:
In most cases it will not matter at what point in time the counter‑claim, set‑off or cross‑demand is quantified, but in this case it does. If it were quantified at the date of the hearing before me the counter-claim, set-off or cross demand would exceed the amount of the judgment debt.
Our case as well, if the Court pleases, on the figures worked by Justice Lander that situation was also true as of the time that the matter was heard before the federal magistrate. That is set out in the table that we ‑ ‑ ‑
GUMMOW J: Now, his Honour sets out on page 45 of the appeal book paragraphs 78, 79, the legislative structure of the clause. Where does he deal with Harris v Caladine?
MR TILMOUTH: Well, at 77, your Honours. The only reference that his Honour made to the Harris v Caladine point is at 77:
In reaching that conclusion I have not overlooked the nature and content of the registrar’s jurisdiction.
Now, that is all that his Honour does to reflect a long submission that we put both in writing and at both hearings on the matter relating to Harris v Caladine. It was referred to his Honour and quoted at length at both hearings. This occurred in two days. I can assure your Honours that his Honour called us back, a letter was written by the associates, where his Honour called us back for further argument on this very point. I can assure your Honours that Harris v Caladine and the other cases in relation to the jurisdiction he was exercising were debated at length. In paragraph 77 is the only acknowledgement that his Honour gives to constitutional principle. What his Honour finds, if the Court pleases, however, on page 46 – well I should say paragraph 76 ‑ ‑ ‑
GUMMOW J: Were there any 78B notices given? I am not suggesting it was necessary but ‑ ‑ ‑
MR TILMOUTH: No, they were not, if the Court pleases, because the submission at that stage was it was simply an application of Harris v Caladine itself although that was constitutional in a sense. The critical issue was the relevant time. What his Honour held, your Honours, at page 45, paragraph 76, at line 15, was the relevant date was when the “notice was heard by the registrar” and that we submit, in effect, is the error of importance in this matter.
Now, why his Honour reached that conclusion emerges at page 46. It is essentially this. At paragraph 81, his Honour acknowledged that there was a rehearing de novo before the federal magistrate – that is clearly correct. But his Honour decided the question on policy reasons and, in our submission, erroneous policy reasons because what his Honour said at paragraph 82 was that if the matter was read the way we submitted that it:
would be to give the appellant a distinct advantage. The appellant would be entitled to take advantage of the time which has elapsed between hearings -
which, by the way, was only four months in this case, it was not a great period of time -
On the other hand the respondent, who would be entitled to interest on the judgment after the judgment was entered . . . at a rate prescribed by the District Court Rules, would not be entitled to bring that interest into account.
In a case such as this it would always be in a debtor’s interests to have the proceedings heard before the registrar and then seek a review and thereby obtain the advantage of the time which has elapsed.
Now, in our submission, that is entirely irrelevant. If one accepts the constitutional construct and the way that this Court has held in Harris v Caladine ‑ ‑ ‑
McHUGH J: Yes, but that is the issue, is it not? You seek to inject the constitutional issue into it, but maybe the constitutional issue does not arise because the case turns on the proper construction of the Bankruptcy Act; the Federal Magistrates Act and the Federal Magistrates Courts Rules. It is a question of construction and, therefore, the date selected by the learned judge, argue it is the correct date by reason of the construction of those sections because that is the effect of them and it does not depend upon any Harris v Caladine point.
MR TILMOUTH: Well, if the Court pleases, that is effectively, of course, what his Honour has held at pages 46 and 47, but it cannot replace the undoubted fact, in our submission, that what happened before the magistrate was a hearing in the relevant sense. The registrar, because of ‑ ‑ ‑
McHUGH J: But the issue is that if before the magistrate, must the magistrate, given the terms of the relevant statutes, decide the case as at the date of the hearing before him or as at the date when the bankruptcy notice was heard by the registrar. It has nothing to do with Harris v Caladine. It is a question of statutory construction, is it not?
MR TILMOUTH: Well, it is on the section 40(1)(g), if the Court pleases. But once the matter went from the registrar to the federal magistrate, it was still a hearing for the purposes of section ‑ ‑ ‑
GUMMOW J: The registrar could not be the court, could he, because of – setting aside bankruptcy notices is a judicial act, is it not?
MR TILMOUTH: Exactly. It could not be the court either. I know that the registrar was the court in the general sense but ‑ ‑ ‑
GUMMOW J: I mean in a Chapter III sense.
MR TILMOUTH: Exactly, it is not, because Harris v Caladine said it was not because there is a full right of appeal and that is the only reason that saves the delegation of jurisdiction by judges in the Family and Federal Courts to registrars. So the relevant hearing, if the Court pleases, had to be both by reason of construction of the Federal Magistrates Court Act itself and by reason of the proper construction of the Bankruptcy Act.
GUMMOW J: Section 27 of the Bankruptcy Act invests jurisdiction in the court, does it not?
MR TILMOUTH: Concurrently, in the Federal Magistrates Court and in the Federal Court. In our submission, that really is the essence of the matter. In no sense for Chapter III purposes can the registrar be regarded as a Chapter III court, so there is no difficulty, in our submission, when one is driven back to section 40(1)(g) and talks about the court being satisfied in saying that has to be once an appeal has been instituted to a Chapter III court, that has to be, for relevant purposes here, the time the federal magistrate heard the matter ‑ ‑ ‑
GUMMOW J: It is not an appeal.
MR TILMOUTH: That is right, exactly. It is a full review and, therefore, it is a hearing in every sense. It replaces whatever the opinion the registrar held in relation to the matter and that essentially, if the Court pleases, is what we submit is the first special leave matter.
The second matter we would agitate, if the Court pleases, and this also goes to the merit, is what we have put in the outline is the failure to exercise the full appellate function. Your Honours, his Honour Justice Lander came to the view that in general the construction of the insurance policy by the registrar and the federal magistrate was correct in the basic benefit that it gave, that was the $2,000 per month.
But, your Honours, what his Honour did find were three things that had not been considered and overlooked and, therefore, were errors in the “courts” below. The first was that the applicant would be entitled to interest under either the District Court Act or the Insurance Contracts Act, and that appears at page 47, line 15, where his Honour expressly held that. His Honour also held that that interest would be $6,550 at 9 per cent at page 50, lines 14 to 15. In that respect, it followed that the courts below had erred. Secondly, if the Court pleases, his Honour held that there were errors in the court below by the failure to factor in the cost of living adjustment allowed for in the policy and his Honour made that finding at page 50, lines 2 to 4, that the monthly benefit would increase by 5 per cent after one year. He also made the same finding at page 43, at the bottom, the last line:
would be entitled to the cost of living adjustments under cl 4 which –
his Honour assumed would be 5 per cent. Both the registrar and the magistrate below had also failed to take account of that matter. His Honour allowed at page 50, your Honours, paragraph 97, line 16 the fact that the policy itself:
provided for the waiver of premiums during the period that the policy owner is in receipt of benefits –
and his Honour assessed that at line 26, at $6,200. Now, there are other issues there, if the Court pleases, but in our submission, those were three identifiable appellate errors.
Now, once that had occurred, and that error was identified, sections 24 and 28 of the Federal Court Act combined, as read by this Court in both Ward v Western Australia and Allesch v Maunz required his Honour then to assess the matter as it exists at the time of the appeal before him. Now, that meant, if the Court pleases, once those errors were identified and his Honour was bound to interfere according to ordinary appellate principle, he then had to assess the benefit of the policy as at the time that it was before him.
As I pointed out, if the Court pleases, at the very start of these submissions, at page 44 his Honour acknowledged that if the matter had been decided before him – this is again at lines 27 and 28:
If it were quantified at the date of the hearing before me the counter‑claim, set-off or cross demand would exceed the amount of the judgment debt.
There is clear acknowledgement, in our submission, that once, therefore, those appellate errors are identified and once it is accepted, as it must be, that his Honour was required to then assess the benefit under the policy as it exists at the time of the appeal before him, in our submission, he fell into error in any event by then deciding alternatively that the date when the application stood to be assessed was the date of the hearing before the registrar as his Honour did at page 45.
So in our submission, if the Court pleases, there are two basic and fundamental errors. One is what I might label generally “the Chapter III, Harris v Caladine error” and, in our submission, that is a question of importance, and in any event ‑ ‑ ‑
GUMMOW J: Does this not mean, on this other branch of your argument, that this question of set‑off will never be quantified until this process through the Full Court of the Federal Court.
MR TILMOUTH: Well that may be, yes, but, your Honour, his Honour was sitting as a Full Court.
GUMMOW J: I realise that.
MR TILMOUTH: Yes.
KIRBY J: That is a curiosity you know. I mean this is yet one more case where, in effect, it is an application for special leave to appeal to this Court where there is a single judge of the Federal Court being asked to marshal a Full Bench of this Court. It is one thing for this to happen in refugee cases where there is a great press of business, but we are getting to the point where this becomes the normal principle of Full Court appeals to this Court from the Federal Court. I must…..if that happened, I do not think this Court should deploy more than three Justices to hear such appeals.
MR TILMOUTH: No. Well, I can tell your Honours that both parties before the matter got before Justice Lander had requested three judges sit because of the matter and the direction that was given by the Chief Justice.
GUMMOW J: There are four resident Federal Court judges in Adelaide, are there not?
MR TILMOUTH: Yes, there are, Justices Mansfield, Finn, Lander and Selway. Anyway, the request was made by both parties but the direction ‑ ‑ ‑
GUMMOW J: Well, there are only seven of us and we have to look after whole country, not just Adelaide.
MR TILMOUTH: Quite. Anyway, your Honours, that is what happened as a matter of history. So in the end result, may it please the Court, we reach the same point via two different and independent routes: the first is the constitutional route and the second is the failure to ‑ ‑ ‑
GUMMOW J: Well, yes, but the first route brings you to a full stop, does it not, at the time you get in the Magistrates Court? The second route keeps you on the train, does it not?
MR TILMOUTH: Well it does, if the Court pleases, but we would submit the first route is not a full stop if one accepts the primary submission I have already put about the constitutional nature of the ‑ ‑ ‑
GUMMOW J: Yes, but that only gets you as between the registrar and the Magistrates Court.
MR TILMOUTH: Yes, but once we are before the magistrate, if the Court pleases, we exceed, on the figures worked by Justice Lander, the judgment debt by that time.
GUMMOW J: Yes, but not by as much as you would if you keep on the train.
MR TILMOUTH: No, but enough anyway, if the Court pleases.
GUMMOW J: Yes, I understand.
MR TILMOUTH: May it please the Court.
McHUGH J: Yes, Mr O’Donnell.
MR O’DONNELL: Your Honours, in essence there are three reasons why a grant of special leave is not appropriate in the given circumstances. The first is that the decisions as and when they were made were overtly correct and that there is no tension with the constitutional principles that are enunciated in Harris v Caladine.
GUMMOW J: Why not?
MR O’DONNELL: Harris v Caladine deals with the appropriate procedure that must be employed for the court to properly review the decisions that are brought about by the registrars exercising the delegated powers.
McHUGH J: But is not the problem this – it stems from Harris v Caladine – that if a party wants to go to the magistrate then the registrar’s decision is written in sand, it is of no effect whatever. The order of the magistrate is then made as at the date of the hearing before the magistrate, or the date of judgment. It does not operate retrospectively unless you can construe the statutes to achieve that effect and at the moment I am not sure that you can, I do not think that you can.
MR O’DONNELL: The proposition is put forward to answer that, that the statute is indeed construed in that manner. The statute in question is, of course, the Bankruptcy Act and part of the Bankruptcy Act that we are dealing with is a procedure that gives rise to this fictional event called the “act of bankruptcy.” It is within the powers of the Commonwealth of Australia to enact legislation that goes to the procedure necessary for a party to come before a court ‑ ‑ ‑
McHUGH J: That may be accepted, but you do not get much out of section 40(1)(g), do you? It does not tell you at what time the counterclaim has to be determined?
MR O’DONNELL: No, although that section and that very issue has been the subject of judicial consideration over the years.
McHUGH J: In England, of course, and there are statements in the authorities here, but 40(1)(g) perhaps does give a clue when it talks about satisfying the court. Now, the registrar is not the court.
GUMMOW J: You find the court from section 27, do you not?
MR O’DONNELL: The “court” is defined of memory in section 5 to include the Federal Magistrates Court.
GUMMOW J: Of course.
MR O’DONNELL: And then in turn ‑ ‑ ‑
GUMMOW J: But that is composed of Chapter III judicial officers and only federal magistrates.
MR O’DONNELL: Yes, your Honour. Under the Federal Magistrates Court Act, section 103(2):
A power delegated . . . exercised by a Registrar, is taken, for all purposes, to have been exercised by the Federal Magistrates Court -
so in dealing with the statutory scheme of things, with respect, your Honour ‑ ‑ ‑
GUMMOW J: There may be a question about the validity of that.
McHUGH J: Exactly.
KIRBY J: They would have slipped that into some of the earlier cases if they could get away with it.
GUMMOW J: Yes.
KIRBY J: They are just becoming bolder.
MR O’DONNELL: Your Honour, the proposition put forward is ‑ ‑ ‑
GUMMOW J: You will have the Parliament giving power to registrars to decide all sorts of significant Chapter III questions if that section is ‑ ‑ ‑
KIRBY J: We have a single judge being taken to be the Full Court. Next I will be saying a single Justice of this Court will be taken to be the High Court.
McHUGH J: How can a non-Chapter III officer constitute the court?
MR O’DONNELL: In the manner that is prescribed, the Federal Magistrate’s Court Act is an enactment. I think the ‑ ‑ ‑
GUMMOW J: We know what it says in the Act.
McHUGH J: The question is whether it is valid.
GUMMOW J: That does not hit us between the eyes.
KIRBY J: Unless he has been anointed or she has been anointed with Chapter III holy water.
MR O’DONNELL: Thank you, your Honours. The proposition is put that the scheme of things as set out by the Bankruptcy Act where the Act refers to the court, both the question of the court composed at what level and the question of the timing of the hearing become a question of statutory interpretation of the Bankruptcy Act. We are dealing with an Act that is by this very device of this act of bankruptcy, designed ‑ ‑ ‑
GUMMOW J: Well, the commission of an act of bankruptcy traditionally is a very serious matter because, in effect, it can affect status with all sorts of consequences.
MR O’DONNELL: Well, the consequence naturally of an act of bankruptcy is that it ‑ ‑ ‑
GUMMOW J: Hence the involvement of the court.
MR O’DONNELL: Yes, your Honour. But, equally, an act of bankruptcy can arise in many other ways that do not involve the court necessarily. Section 40 prescribes a list of things that can comprise an act of bankruptcy that have no involvement of the court whatsoever. One example, although technically this may involve the court, is the issue of a warrant of execution on the relevant judgment being returned nil effects, that ‑ ‑ ‑
GUMMOW J: But whether that has happened is a justiciable question.
MR O’DONNELL: Yes, your Honour. There are other examples, for example, a statement by the debtor that the debtor is unable to pay the debtor’s debts is also stated to be an act of bankruptcy.
GUMMOW J: Yes, we realise that.
McHUGH J: But this procedure seems to be some sort of an attempt to get around Davison’s Case.
MR O’DONNELL: The procedure as it stands and as it has been applied in the cases since Re GEB in 1903 is that the debtor has the opportunity to set up whatever counterclaims the debtor may have as the date of the original hearing before the court, and that in this particular case was the test that was applied by the relevant registrar. The reason why it must be so, of course, is because the consequence of the finding that there is not a counterclaim or an offsetting claim of sufficient value is that the application is dismissed by the registrar and an act of bankruptcy is recognised by the legislation to have occurred at that point.
The occurrence of that act of bankruptcy then has the flow‑on effects of it may result in a petition, if so it may determine the relation‑back periods relevant to clawback provisions for the trustee. The legislation recognises the time criticality of the process and the submission is that it is in response to that that the courts have interpreted these provisions so as to have a particular time critical effect.
Now, because of Harris v Caladine the question of delegation of judicial power and the role that a registrar may play and, indeed, the review process that occurs afterwards comes into focus as my friend has submitted. However, on the authority of Harris v Caladine, that case focuses on the role that is to be taken by the court in review. It is to be a hearing de novo, the court is to look at the question afresh having regard to whatever new evidence or principles or issues may have arisen at that stage.
However, the overriding question is always going to be whether the act of bankruptcy that has occurred at that point ought to be interfered with. We know in Guss v Johnstone, this Court looked very closely at the question of whether the court would be ‑ ‑ ‑
GUMMOW J: Yes, but that was a matter determined by Justice Sundberg and then it went on to the Full Court of the Federal Court.
MR O’DONNELL: Yes, your Honour.
GUMMOW J: It is not in pari materia of this case.
MR O’DONNELL: No, your Honour, but the question the court was dealing with in that case was whether. given the act of bankruptcy had occurred at that point, whether it was within the powers of the court to interfere with that statutory effect and the court held that it could because the court could modify or change the orders that were made at first instance and that would, in effect, have the effect of a…..act of bankruptcy.
The test in the present case, in our submission, is that whichever way one approaches the question of the review on appeal it comes down to the question of whether the court should or should not interfere with the act of bankruptcy that has been recognised by the Bankruptcy Act to have occurred at that point. If one accepts that proposition, well then it becomes clear that the facts, circumstances and things that occur after the act of bankruptcy occurring maybe have regard to if they be relevant to the question of whether or not the offsetting claim in this case existed at that time.
So, for example, if there was further evidence suggesting that there was a greater quantum of claim that was available or, indeed, if there was some other claim that the applicant in this case could have set up before the registrar at the time, then certainly those matters are matters that could be taken up on the review process and so on and so forth. But the effect of the submission that is being put to your Honours by my learned friend is that the Court should have regard to claims that arose after the act of bankruptcy in order to set it aside. In our submission, it does not follow and it leads to the surprising result that a process of this nature, which is designed to have a hammer‑fall effect by the legislature, results in having a run‑on, flow‑on effect such that it will trouble courts in the higher jurisdictions.
The first proposition, therefore, is that whilst Harris v Caladine and cases of that nature do adequately prescribe the role that must be taken ‑ ‑ ‑
GUMMOW J: Well, the route is really Davison’s Case in 90 CLR.
MR O’DONNELL: Yes, your Honour. The role of the appellate jurisdiction or reviewing jurisdiction, the hearing de novo is well understood from those cases. It does not require a revisitation from this Court. In the context of this matter, it does not fall foul of the statutory interpretation point that arises from the unnecessary interpretation of the Bankruptcy Act. Put simply, the Bankruptcy Act prescribes the legal test. Harris v Caladine and the various other provisions that we have submitted in connection with, prescribe the review procedure that is necessary in connection with a decision of the registrar in applying that test.
The second submission, your Honours, is that in any event there was no injustice to the defendant in this case. Neither Federal Magistrate Driver or Justice Lander saw it necessary to go into an important part of the case that was submitted by the respondent before those courts. That was a submission that in addition to the judgment debt that is the subject of the bankruptcy notice, the respondent enjoys the benefit of $22,000‑odd Supreme Court judgment and again in connection with costs, again arising from the same subject matter. That was not the subject of the bankruptcy notice.
This has been pleaded as a defensive ground in connection with the action presently maintained by this applicant in the District Court. Now, logically if the application in the District Court is entirely successful in the manner contended by my friend, the first hurdle that the applicant will have to get over is the fact that the defendant – the respondent, has a judgment for $22,000, that it is quite within the unilateral discretion of the court to merge into the net order that the court pronounces at the end of that case.
So put simply, all of the figures that my friends contend the Court should have regard to overlook or ignore the fact that there is an additional $22,000 that they are going to have to get over the hurdle of before they get any award out of the asserted offsetting claim.
McHUGH J: Well, if we allowed the appeal, granted leave, allowed the appeal and sent it back for hearing now, one would have thought that the amount accruing under the policy would have overcome the $22,000.
MR O’DONNELL: If one assumes that the hearing that would then be conducted is again conducted effectively de novo, that would be correct, your Honour. Indeed, that would be a correct proposition wherever any error – whether it had the ability to affect the veracity of the judgments pronounced in the courts below, where there was any error it would always come to that position. In our submission, that is not a correct proposition of the applicable principles.
Closing out on the second proposition that there is no injustice to the defendant, the result would have been the same regardless of the time had that issue been taken into account. The issue was agitated. The court did not see it necessary on the reasoning of the court to go into that. However, it was before the court. The proposition flows, therefore, that this is not a suitable vehicle for even if there is viewed to be an issue here for that issue to be dealt with by this Court.
The third proposition is to the effect that the procedure that we are dealing with is one merely as to the question of whether or not an act of bankruptcy has occurred. The injustice that the applicant may face if there has been any injustice is that the applicant will merely be called upon to answer as to whether or not the applicant is solvent on a bankruptcy petition. If the applicant is solvent, well then the bankruptcy petition will be dismissed. If the application is insolvent then ‑ ‑ ‑
GUMMOW J: He is entitled to due process.
MR O’DONNELL: Yes, your Honour. Those are the respondent’s submissions, your Honours.
McHUGH J: Thank you, Mr O’Donnell. Yes, Mr Tilmouth.
MR TILMOUTH: Your Honours, two points if I may. On the injustice about this question of the 22,000, that is quite irrelevant: one, because it was never the subject itself of the bankruptcy notice; secondly, an inquiry as to whether or not there would be a set‑off is like inquiring under section 40(1)(g) whether there would be a set‑off to the set‑off under section 40(1)(g) or a contribution or something else that might reduce the amount which is an inquiry courts in bankruptcy have never entered into, and the third reason is procedural, if the Court pleases, although that was known to Justice Lander it was never argued in the way it is argued now. You do not see in his Honour’s judgment or in the judgment before the registrar or the judgment before the federal magistrate any reference for that reason; although I acknowledge that all of those people knew about this matter.
The other point of reply, if the Court pleases, relates to Davison’s Case. The difference in Davison’s Case, of course, there was an attempt to invest federal jurisdiction under Chapter III directly in a registrar. Here we have, of course, the device of delegation but the fact remains the same that in the end result it must be Chapter III power that has to be exercised and that hedges any view about the way the operation of section 40(1)(g) must take place in the Australian constitutional setting. If the Court pleases.
McHUGH J: Thank you, Mr Tilmouth. Yes, there will be a grant of special leave in this case.
Now, Mr Tilmouth, during the course of argument you seemed to be suggesting that the clock never stops debts accruing, but your notice of appeal is not drafted on that basis and you are confined to the notice of appeal.
MR TILMOUTH: If the Court pleases.
McHUGH J: The clock stops with the magistrates so you will have to make that proposition.
KIRBY J: Was the application that the matter be heard by a court of three made in writing to the Federal Court?
MR TILMOUTH: Well, it certainly can be, your Honour. I do not recollect how it was made in this case. I think it was made orally in the directions hearing before either Justice Lander or another judge who heard it, but it was certainly made by both parties and my best recollection is in open court and my friend seems to agree with that.
McHUGH J: Yes. Thank you, Mr Tilmouth. This panel of the Court will now adjourn till 9.30 in the morning.
AT 4.10 PM THE MATTER WAS CONCLUDED
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